Do You Really Need It?
By Cassandra_BHM | June 30, 2010
It can be difficult to save money. It’s even more difficult when we spend our hard earned cash on items that we think will be either good products or somehow good for us. Everyday consumers are inundated with new products and services that they most certainly could live without. Everything from satellite television and frequent buyer cards to movie theater snacks are what many of us would refer to as rip-offs. As consumers we do have to choice to buy or not to buy; but when you’re at the movies, where else are you suppose to get your popcorn?
Market inefficiencies, as economists refer to them, are when we pay more for something than its value. Many companies rely on consumer naiveté and pressure when they push these ‘must have’ items. While purchasing $100 worth of books you are suddenly offered a book club card for another $20. The discount begins with your next purchase. For those in a hurry or feeling the pressure from the long line of customers behind them, they simply fork over the additional $20. Here are a handful of the more popular, and well known, ‘rip-offs’:
Brace yourself but it’s been noted that Americans spend more than a billion dollars a year on travel insurance, which is meant to protect us from stolen luggage and cancelled flights. This is of the kind of travel insurance that is paid to agents. For most of us, this coverage comes with credit cards, so paying for it ‘again’ is redundant and is also a waste of money. If you’re unsure what your insurance or credit card coverage is, check before paying for additional coverage you may not even need.
Another household favourite that has been labelled a rip-off are the ready-to-drink baby formulas. The premixed brands cost around $45 for 6-32 oz cans. By purchasing the water-mix powder and doing it yourself, you can make 162 ounces for less than $25. That’s an enormous savings with one product costing 23.4 cents an ounce compared to 14.9 cent an ounce. There’s a 57 per cent mark-up to have someone add the water and shake it for you.
The handy but controversial credit card gift cards have definitely made the consumer rip-off list. It’s only recent that consumer protection is coming down hard on these companies and it’s suspected this protection will spill over onto gift cards as well. Whether you’re buying a $25 or a $5,000 care, American Express charges $3.95 for the card. Companies like Visa charge $3.50 for each card plus an additional $2.50 monthly fee after the first 12 months. Another issue with the cards is that many merchants will reject them if the amount on the card is less than the purchase price of your items, so any remaining balance on the card cannot be used.
A little common sense and research will go a long way when it comes to saving more of your money.
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Money Basics to Live By
By Cassandra_BHM | June 29, 2010
Whenever times get tough, the experts spend forever arguing about how we got there. Well, maybe that’s important, but so is figuring out how to get out of the mess. So, if you’re finding yourself in a budget crunch, credit card trap, or other financial blunder, here are some tips to save yourself a few bucks.
Pay down more than the minimum on your credit cards. One of the biggest mistakes people can make is to only pay the minimum required each month on their credit card. Try increasing the payment, even by only 10%. It will get that card paid down and off much more quickly, even years earlier, if you’re carrying a high debt.
Get your interest rate lowered on your credit card. If you’ve been paying that credit card off each month, phone up and ask for a lower interest rate. No matter how tight the economy gets, businesses want to retain good customers, and will do a lot to keep them.
Try a home vacation. If you usually travel somewhere with your family each year, consider staying at home. Make it extra special by planning home events like late nights watching the stars, walking tours of interesting areas of town, or even a few nights stay in a hotel near by. It’ll still be great, and cost a lot less. Oh-and when you call that local hotel, tell them what you’re doing-they may give you a super deal for staying in town.
It cannot be said enough: make a budget. Nothing will get you back on the right money track than when you see the numbers in black and white. Start easy by just collecting every receipt when you buy something, and making a list of what you’re spending. Then cut back a little bit. If you find you’re spending $200 each week on groceries, next week spend only $150. Look at where your money is going, and plug that financial leak. Do it one leak at a time, and before you know it, you’ll have enough to float your financial boat.
Get a part-time job. If you have tried everything and you still cannot save enough money, or generate enough out of your job to pay the bills, it may be time to consider a second job. Let people know that you’re looking. Even a few hours a week can sometimes make a huge difference, and keep you financially afloat.
Don’t let tough economic times be an excuse to run up your credit cards, lower your credit score, or hurt your financial future. Money basics like budgets and watching costs are strategies for good times and bad.
Posted in Being Frugal, Financial Planning
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Better Attitude, Bigger Income
By Cassandra_BHM | June 28, 2010
If you think the only way to save is to make big bucks, think again. Lots of research shows that the ability to save is more of an attitude than an income. Even Donald Trump agrees that a winning attitude is what separates the winners from the rest (oh-and buy real estate-another Trump tidbit).
But if you’re using the excuse that you just don’t “make enough” money to save even a few dollars a month, all we can say is “unh, unh, unhhh”-not so. But because it’s just so much more fun to spend than save, we get it. Still, you got to save, dude. So here are a few ways to help you put a few bucks in the bank.
Change your attitude. Every time you moan, groan, or otherwise belly ache when you talk about paying a bill, putting money into an RRSP, or setting something aside for a rainy day, flick yourself on the nose-or better yet, have someone else do it for you. Then put $5 into a piggy bank as a penalty for a bad attitude towards saving your pennies.
Pay twice. Every time you go to buy a cup of coffee, eat lunch out, or purchase a newspaper, magazine, DVD or other entertainment material, put the same amount of money into an account intended for saving or a bill payment. See how much you’ve got at the end of the month. Now you know how much money you blew (but could’ve saved) this month. This little trick will also show you how much those items really cost since most of us only take home about one-half what we gross. So buying that $5 DVD is really costing you $10, that coffee is really about $7.50, and going to the movies? Whoa . . . but, you get the picture.
Get a piggy bank. Put all your change in it, every day. Make sure you glue the lid closed so the only way you can access your money is by breaking the bank-so get glass, too, and maybe you’ll think twice before busting into your coin bank.
Set up a glass savings jar on your desk at work. Write, “Teach me How to Save Money” on it, and have your friends and co-workers write down all the ways they see you throw away money, and stuff their money-saving suggestions into your jar. Set one up for your spouse and kids, too. Reward the funniest money-savers by putting $5 into your own account-then follow the advice.
Think of fun ways to get you into the savings groove, and before you know it, you’ll have a whole new attitude about your money and your life.
Posted in Being Frugal, Financial Planning
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Debt-Ridden Canada
By Cassandra_BHM | June 23, 2010
Canadians carry more personal debt per person than in any other developed country in the world, at a whopping $41,000+ per person. Shocking, isn’t it? Look around at your family-spouse or partner, kids, parents, in-laws-and add it up. How much do you personally owe? At the same time, more than 80% of Canadians also want to be debt-free. What a conundrum. And how did we ever get here in the first place?
Some of the reasons we got into this debt-problem include the low interest rates that made mortgages, cars, boats, second homes, riding mowers, and other big ticket items attainable for many of us. Life was good in the ’80s and ’90s. Lines of credit opened up, and multiple credit cards became the norm. It was all about cheap dollars and spend! spend! spend! We could live large, but pay pretty small for luxuries we might otherwise have had to refuse ourselves. But it got blown right out of proportion.
In the past 18 years, Canadian incomes rose only about 12% while our personal debt rose to the tune of 72%. That’s a six-fold difference between the money we earned, and the money we spent. It had to catch up with us. After all, sooner or later, you’ve got to pay the piper.
So what can you do if you’re one of those people owing that personal $41,000+ debt? All’s not lost. And 40-Gs can be paid down and back more quickly than you might think.
There are a few tough, but pretty clear and easy, rules to follow to get your finances back under control. First, you have to just say no-no to any more spending. Right now, cut back on every luxury you had planned-even if it means you forfeit down payments or security deposits. Better to lose a small amount of money than be stuck with a bill that only adds more to an already overextended line of credit. Next, start tracking your money and use cash only for every single purchase you make. Third, give yourself a budget. Allow only set amounts for groceries, gas, utilities, rent, and other costs. Going over? Figure out ways to save by buying no-name brands for food items, sharing gas costs by ride-sharing, or just driving less, turn lights out and flush less to save on utilities, and so on.
There are lots of ways to save huge when you set your mind to it. And, for every penny you save, put it towards that debt. And before you know it, you’ll be one of the 20% of Canadians who’s not worried about their debt-because you won’t any.
Posted in Reducing Debt
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Cheap Vacation Ideas
By Cassandra_BHM | June 22, 2010
Vacations are great. For Canadians, with our long, cold winters, we usually want to take time out to bask in the warm summer sun. That also means most things will cost more in the summer (like air flights, gas, and hotel rooms) than in the off-season. It also means more crowds and that can mean less fun than you’d hoped for-long lines, sell outs, and scalper prices on just about everything. So, you might want to find a few cheap and local ways to spend your holidays.
On a hot day in July, an air-conditioned library might be the perfect way to spend the day. Go to story time, even if you don’t have kids. Listening to stories is an ancient tradition in almost every culture. Doesn’t happen in your library? Start a story time-pick a popular book and read one chapter every week. Your library will love you-and they’ll know how to advertise the event. You’ll be astounded at how many people will come out-and maybe share in the reading.
Head to the park. Parks have got to be one of the best inventions around. They almost always have grass, trees, walking paths, swings, sometimes water and birds, and picnic tables. Some even have BBQs (okay, okay, maybe not the best ones). But they can usually cook up a hotdog or marshmallow-enough to keep most of us full and happy on a hot August afternoon.
Go to the beach. Even if it’s quite a drive, just start out early. Pack up tons of food-beaches are synonymous with starvation-and don’t forget the sunscreen. Fluids are another must-freeze your drinks the night before so they’ll stay cold all day long.
Take a city bus tour. These trips can sometimes be pricey, but if you can afford it, it’s a great way to learn new and exciting things about where you live. If you don’t have a bus tour in your town, think about going to the library and finding out things about where you live. When you know enough, you can organize a walking tour or a tour using your public transit system. Once again, the library will help you out, and it’s a great way to build community.
Have a night out under the stars. Even if you don’t have any camping gear, you can take old sheets, covers and pillows outside, and lay down to watch the stars at night. Spend some time trying to identify constellations or count shooting stars. Once the kids fall asleep, sneak them back into their own beds.
Holidays don’t have to be expensive. In fact, sometimes the best ones are just being with your family and friends.
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Ways to Cut Out Monthly Bank Fees
By Cassandra_BHM | June 21, 2010
Banking is not as simple as it was even just ten years ago. With every account and transaction there seems to be a fee. The only way to avoid the fees is to keep a high minimum balance. For many people, not only is the minimum balance hard to keep up with, so are all the bank fees. For those looking for a few ways to cut back on the monthly charges, you may want to consider these suggestions.
Up until now, banks have been able to ‘give’ preferred clients overdraft protection of varying amounts. This means if you are overdrawn on your own money, the bank has an egg of their money on which you can draw on and use however you like. For this service, they do however tend to charge high fees. According to the Centre for Responsible Lending, these charges can range anywhere from $5 to $34 per transaction.
Some banks even charge a fee for every day your account sits in arrears. The Bank of America charges $35 if it determines an account has been in arrears for five or more business days. The U.S. Bancorp also has similar fees. They charge overdrawn clients $10 per purchase on any overdraft purchase of $20 or less (maximum of three per day) - which are down from their usual $19 to $37.50 fees. So if you use your overdraft protection three allotted times in one day, you will be hit with a $30 transaction fee plus additional interest at the end of the month.
As of July 1, 2010 banks are no longer able to ‘give’ clients these overdraft protection accounts unless the client requests one or agrees to being given one. Having an additional $1,000 or $10,000 readily available can be enticing to most and puts consumers at risk of additional personal debt, not to mention the monthly interest and usage fees that come with them. If you were looking to save on your bank fees, you would be well advised to stay away from overdraft protection accounts.
A different option may be to consider linking your personal accounts together, as in your chequing account with your savings account or a credit card account. In the event you do have to dip into additional money, at least this way it can be your own. Banks will still charge a fee, usually around $5 or $10 per transaction, but it is better than getting hit with the fees plus interest charges at months end. However, be aware if this is an option you are considering. The U.S. Bank offers to link customer accounts to what they call a reserve line of credit that charges higher interest. That interest is charged right away, meaning the moment you use it. Even if you pay your balance in full each month, with this option, you will already have been charged the interest.
Balancing your checkbook is something that should be done at least once a month, if not every two weeks. To avoid needing such backup money, it is important for consumers to keep tabs on their account balances.
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Ways to Save on Your Pet
By Cassandra_BHM | June 18, 2010
Pets-dogs, cats, birds, fish-are wonderful additions to the family. They are loyal, fun, and can teach children a lot about responsibility and caring for something outside themselves. On the down side, pets can cost a fortune by the time they’re neutered, vet-checked, clipped, fed and dressed. So can you even afford a pet?
The question is a good one to begin with-is the cost of a pet within your budget. It might not be, and that’s a hard reality. But what you might be able to afford is to adopt a pet. With so many pets needing good homes and loving caretakers, and shelters overrun with trying to care for them all, you may be able to adopt a pet-sometimes for a long time. And most shelters will still pick up the costs of feeding, grooming, and caring for the animal in exchange for you providing a loving family environment.
If you can afford a pet, watch those vet bills, and be sure you need to see the vet at all. These days many of the services you might pay for a vet to give you-like pills-you can get much cheaper online. Your vet only needs to supply a prescription (the same way your family doctor might give you one) and you can price shop online to get the best price.
Watch pet clothes. They can add up more quickly than the ones your kids wear. And even though it seems adorable to put them in shirts and sweaters and booties, most animals are generally equipped to handle the weather.
Buy pet food at outlets, or make your own. By going online and googling your favorite pet, you’ll discover that many people prepare their own food-and really cheaply. Or, make your purchases as discount outlets. Avoid the grocery store, though, where prices are often double what you’ll pay at the outlet.
Beware the pet toys. Some toys are just too expensive. Your puppy will likely be just as happy banging around an empty plastic container (be sure it’s clean) as very costly chew toys. For other toys, consider going to your local second hand shop where you can pick them up for pennies. But the best plaything you can give your pet is your company and affection-and you can provide that for free.
Pets can add a whole new dimension to your life, but make sure they don’t also add a whole new line item to your budget.
Posted in Being Frugal, Uncategorized
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Keep More of What You Earn
By Cassandra_BHM | June 17, 2010
In today’s world most of us find it a common pay-day-experience to spend our money faster than we make it. By the time we’ve taken care of the mortgage, paid the usual monthly bills, taken care of the car and stocked up on food, we do not have much in the way of leftover money. Our savings show it and our bank balance feels it.
If you are looking for a few additional ideas to get that bank balance to a healthier level, here are a few suggestions that may help when it comes to keeping more money in your pocket. The most important rule to successful saving is to set goals. By setting goals, you give yourself a picture of what it is you’re saving for. To have both long-term and short-term goals in mind will provide a structure.
As the wealthy barber would say, pay yourself first. This is another very important rule-of-thumb when it comes to keeping money in the bank. This does not mean don’t pay your bills, it means to immediately set aside that ten or so per cent before it gets spent on something else. When you pay yourself first, you are committing to meeting your financial goals. If you are not good at setting aside that extra cash on your own, you can instruct your bank to provide automatic deductions from your pay. This can be done in many forms such as RSP contributions or any type of investment plan such as common stocks or mutual funds. Once you become adjusted to the difference in your monthly allowance, you’ll hardly even notice it.
It’s also very important to take an interest and educate yourself on what’s out there in the way of investments. Understanding terms such as dividends and capital gains is a must, especially if you’re considering buying a home or starting a stock portfolio. Many financial institutions offer free seminars on topics such as financial planning and stock market overviews. Educating yourself on your options could be a wise investment in itself.
Of course, it’s also imperative to get rid of that credit card debt. Credit card companies are known to charge incredibly high interest rates, starting anywhere from 17 per cent to 22 per cent. Placing small purchases on your card and then missing a payment can really add up and can end up costing you hundreds of wasted dollars a year.
If you are really stuck and just cannot seem to get ahead on your savings, perhaps giving a professional consultant a try may help. They should be able to provide you with some sound advice on how to get ahead and achieve your financial goals. If you’re feeling completely overwhelmed by the thought of setting aside extra cash because your current financial situation feels out of control, you may want to consider a debt consolidation loan. A consolidation loan can help you make those multiple monthly bills into one easy to manage monthly payment.
Posted in Reducing Debt
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Expenses to Not Consider for Your Retirement
By Cassandra_BHM | June 11, 2010
If the thought of saving for retirement makes you uneasy, it may help to not focus on some obvious factors such as loss of a regular income. Instead, it could be very beneficial to look at a few of the other obvious factors that come along with retirement…the elimination of many monthly expenses.
By the time you retire, your home will most likely be paid for. Mortgage payments are a large financial burden that likely will no longer exist for you and can easily make the difference between a positive or negative cash flow each month. If you no longer have this payment, it’s a big one to check off the list and will definitely save you thousands each year.
If you have managed to pay your mortgage, moving into a smaller house (now that the kids are gone) will afford you lower utility and tax bills each month as well as possibly free up some additional money that could be used towards retirement savings or paying off other bills.
Childcare is another financial obligation that you can remove from the list of expenses. Your children will obviously be grown and out of the house, eliminating the need for babysitters and monthly day care fees.
Car payments are also another payment that will most likely not be a concern. If you are one of the many people who trade their cars in every few years for a newer model, then you will have to keep payments as a monthly consideration. However, if you have one that is bought and paid for and has been kept in good condition, not only will car payments not be a monthly concern, you will most likely get a great deal on insurance coverage.
If you are financially responsible, then other monthly debts like credit cards and student loan payments should also be non-existent as well. The elimination of such large payments will definitely open up much needed additional money. Getting rid of credit cards especially, allows seniors to get out from under high interest rates, which can easily eat up a significant part of your monthly living allowance.
Life insurance policies are another factor when looking at potential monthly expenses. If you’ve purchased a cash value policy, it will most likely be paid off by the time you retire. If you’ve purchased a term policy, you may no longer need it when your retirement comes around. The elimination of all, or even some, of these financial obligations will make an enormous difference in the amount of money you will need each month to live. With proper planning many retirees are able to live comfortably on savings and Social Security Plans.
Posted in Financial Dreams, Financial Planning
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The Entitlement Trap
By Cassandra_BHM | June 10, 2010
Somehow we have gotten it into our heads that because we work hard, or maybe we have a lousy job, we “deserve” to eat lunch out, drink fancy coffee, or buy whatever whim catches our eye. Unfortunately, that’s just not the case. The fact is, a barrista-whipped cup of latte costs about 100 times (yup, that’s o-n-e h-u-n-d-r-e-d) more to buy than if you make your java at home. For most of us, at least, our incomes just can’t handle that cost.
There are other things that people often believe they must have, cannot do without, or somehow deserve that are just as costly. But if you cut back on buying them, or give them up altogether, you can add a lot of coin to your pocket book pretty quickly. Here are a few of them-can you live without them?
Bottled water. It’s like liquid gold. More expensive than gasoline, and costing up to $4 per gallon, people guzzle it like it’s the cost of Kool-aid. Bottled water costs up to 1900 times more than the tap water you get at home, and uses 2000 times more energy to produce and distribute. So, do your pocket book-and the environment-a favor, and drink your water from the tap at home.
Remember the tune, “57 Channels [and nothin’ is on]”? Cut back on the cable tv and you could save yourself hundreds (maybe thousands) every year. Cut out tv altogether (unh!) and you could bank about $600 every year-not including the cost of the television, the electricity to feed that baby, or the mounting bracket (that start at a cool $100). Can’t stand it? Try doing without for just the summer-then reconnect in time for football season in the fall-you’ll really appreciate the entertainment.
Are you a one-person-one-car family? Drop the second car and you could save up to $1000 every month. People used to car pool, and it’s a great way to save big bucks. And an added bonus is that you can’t run off to the mall or corner store to spend even more cash whenever you get the urge. Get really energetic, and start walking or cycling whenever you can. You’ll get into great shape, and you might be surprised who else you meet walking or cycling around town.
Does your 12-year old have a cell phone? Now really. Okay, the ads say if your child doesn’t have a cell phone, life as they know it may come to an end. But cells can cost $50 per month or more. The flip side is that a landline might not be the right choice, either. Sometimes, cell phones are a good choice-just not 5 of them-learn to share the cell phone with whoever needs it, call sparingly, and consider prepaids that are often much cheaper than monthly plans.
Entitlement thinking can cost a lot more than we have to spend. And sometimes, just going home, pulling out a homebrew, and sitting on the back deck doing nothing can be just as rewarding as a night out.
Posted in Being Frugal, Fixing Bad Credit, Reducing Debt
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